Farm Talk

July 17, 2012

Corn prices vs food prices, don’t blame corn


CNHI

Parsons, Kansas — Only 1.5 percent of U.S. Corn Supply Is Used In “Cereals and Other Products” Category… Farmers Still Get Only nine cents of the $4.19 That Consumers Pay for a Box of Cereal According To USDA Price Statistics

“With a drought-driven-reduced 2012 corn crop we see higher corn prices paid to farmers being blamed as the reason food prices to consumers will rise and that is wrong,” says Gale Lush, Nebraska corn farmer and Chairman of the American Corn Growers Foundation. “Only 200 million bushels or 1.5 percent of the 2011/12 marketing year’s 13.5 billion bushel corn supply will be utilized in the corn use category of “Cereals and Other Products” according to the June 2012 reports from the U. S. Department of Agriculture’s (USDA) Economic Research Service. The farmer’s share is only nine cents of a $4.19 box of cereal.”

“For those who are trying to make corn use for ethanol the scapegoat farmers need to remind the public, politicians and consumers that only the starch from yellow field corn is used to produce ethanol,” said Lush. “The protein, minerals, oils, all those high value feed components, still go to livestock feed just as they would have if the entire bushel of corn would have been fed to livestock. The real added value is that with corn use for ethanol the livestock still gets the feed and the U.S. economy gets all those billions of gallons of ethanol that results in about $1.09 per gallon cheaper gasoline prices at the pump for all U.S. motorists, or a savings in 2011 of about $1,200 per household, according to the University of Wisconsin and Iowa State University.”

Lush added, “According to the USDA National Agricultural Statistics Service the retail price paid at the grocery store for an 18 ounce box of cereal, such as corn flakes in May 2012, was $4.19. The farmer’s share of that $4.19 box of cereal was only $.09 or about two percent.  Even with stronger corn prices the farmer still only gets about two percent of the retail price paid by consumers for the relatively small amount of the U.S. corn supply that goes to cereal products. Who gets $4.10 of that $4.19 price paid by consumers for that box of cereal? According to USDA, off farm costs including marketing, processing, wholesaling, distribution and retailing account for 80 cents of every food dollar spent in the United States. It’s not the price of corn causing grocery prices to go up.”

Source: USDA-ERS June 2012 Corn Food, Seed, Industrial.